5 Signs Of Fraudulent Payroll Activity

Almost all businesses are vulnerable to payroll fraud and it involves a serious alteration of payroll system. There are a number of ways fraud can be committed and the most common is boosting the amount of salary that the employee is supposed to receive. This is already a cause for alarm especially for small businesses because when left unchecked, companies can lose a large chunk of money. It can also be an end to a fledgeling business. Some employees may be claiming to have worked on a specific shift even when these are not true. If you remain unperturbed, your business can dive into a cesspool of bankruptcy and it’s already too late before you know it.

5 Red Flags Of Payroll Fraud

1. Payroll checks are inconsistent.

You won’t be able to find out that there is something fishy going on with your payroll system unless you are keen on details. You might be presented with a payroll with all the information in place, but you need to look closely as you might be missing out on determining the red flags. Are there deductions or taxes being withheld? When there are inconsistencies in your payroll system, it means that there is something unusual going on, which you need to pay serious attention to.

2. Unsecured files.

When someone is given complete access to payroll system even when they are not authorised to do so, is already a good sign that someone is trying to manipulate the payroll records. Only the individuals who are responsible for paying employees should be given complete access to these confidential files. They should not be shared wants anyone who wants to take a “sneak peek” of such records.

3. Duplicate data of existing and ghost employees.

Make it a habit to check your master file to reduce the risk of ghost employees. If you see duplicate information such as the name of employees, bank account and other personal information, conduct further investigation for you to find out if there is an ongoing fraudulent activity in your company.

4. Access to payroll outside business hours.

While out of hours access to payroll cannot be avoided especially when you are trying to meet deadlines in submitting reports, it is necessary that these after hours activity are audited. Otherwise, the access will become questionable.

5. Shared logins.

Logins for systems that contain confidential files must not be shared because it is understood that these are not intended for public access. If your log in information has been changed, you need to surrender your old logins to the payroll staff for deletion.

One person should not be left in charge of the entire payroll system. Have someone to check the records on a monthly or quarterly basis so you can track any fraudulent activity. When a payroll staff intends to add or remove names, it should be done with an approval from the manager or someone from the payroll department.

Payroll must also be kept up to date and hiring a third party payroll staff that can keenly check the details of the record can also nip payroll fraud in the bud. The process of prevention may require immediate attention but it will pay off in the end knowing that your company has been spared from more serious problems.